IRS Delays $600 Form 1099-K Threshold Again
The IRS has once again delayed the implementation of the $600 reporting threshold for Form 1099-K, extending the transition period to 2025.
Timeline
- IRS officially delayed the effective date of the $600 threshold for calendar years 2024 and 2025.
- The $5,000 threshold is implemented for calendar year 2024.
- The $2,500 threshold is implemented for calendar year 2025.
- The $600 threshold will be effective for calendar year 2026 and after.
Impact
The IRS has once again delayed the implementation of the $600 reporting threshold for Form 1099-K. This latest delay, announced on November 26, 2024, will push back the stricter reporting requirements for third-party settlement organizations (TPSOs) and participating payees. The IRS has opted for a phased-in approach, with higher thresholds in 2024 and 2025, to ease the transition.
A History of Delays
The American Rescue Plan Act of 2021 (ARPA) lowered the reporting threshold for Form 1099-K from $20,000 to $600, eliminating the previous transaction limit. However, the IRS has repeatedly delayed the implementation of this lower threshold. In 2022 and 2023, the IRS maintained the higher $20,000/$200 transaction threshold. For 2024, the IRS has set a $5,000 threshold, and for 2025, a $2,500 threshold will apply. The $600 threshold will finally take effect in 2026.
This move is expected to provide more time for businesses to adjust their systems and processes to comply with the new regulations.
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